If all of modern society were a board game, Maria Cadenas thinks it would be a game of Monopoly. But play time, she says, is over.

“Somebody has all the cash, and the accumulation of wealth is totally decided and others are completely left out, and we’re losing the middle,” says Cadenas, the executive director for Santa Cruz Community Ventures. “Those wealth gaps are the results of policies—how the system has been working. So we need to change the system, change the game.”

To fix all this, Cadenas wants to create a local impact investment fund and help finance a more even playing field.

Impact investing has been among the business world’s hottest buzz phrases in recent years. Over time, it’s gone from a vague concept to a way for investors and everyday people to make a difference. Essentially, it’s the practice of putting cash into assets that an investor can feel good about—anything from the environment to journalism in developing countries. These investors typically accept smaller returns than they would on Wall Street or somewhere else.

Although Santa Cruz Community Ventures has not yet finalized its approach, Cadenas’ pitch is to launch a fund that wouldhelp local businesses switch to worker-owned models. With the Silver Tsunami now underway, baby boomers will be retiring. For many, that means selling their businesses.

To help frame the region’s biggest needs, Community Ventures, which is funded by donations, recently collaborated on two economic analyses—one that the group is now getting ready to share, and another with UCSC’s Blum Center that it’s just now finalizing.

Cadenas wants anyone to be able to invest in the fund, for as little as $25. Implementing and scaling this strategy would take time, but she sees that impact investing—combined with what she hopes will be a boom in employee-owned businesses—as the best way to give the county’s economy an even-keeled boost.

“If we don’t address the perpetual generational poverty from one side of the county to the other, we’re gonna be hurting, because most of the county is gonna be poor,” she says. “What does that mean for social structures? What does that mean for transportation? What does that mean for county government funds that are already limited? What does that mean for housing plans? If you don’t address income and wealth gaps, we’re not going to be able to solve the problems jeopardizing our future. If people can’t understand love, I hope they understand numbers.”

DOLLAR BACK

At a recent Monterey Bay Economic Partnership summit, financial adviser Morgan Simon dove into the thinking behind the concept of impact investing, as well as its significance. In the early days, many of the investors were foundations targeting inequality.

“The idea of impact investing,” Simon said at May’s Regional Economic Summit, “was that you could really bridge that gap, that you could have a social and environmental return alongside your foundation return.”

Simon, the author of the new book Real Impact, got her first exposure to some big-picture financial issues at a young age, when she visited Sierra Leone as a USAID worker. While there, she bought a can of tuna at a roadside stand from a woman who had no interest in eating fish out of a can. Simon calculated that the $1 that she had paid the vendor was enough for the woman to buy a few full meals for her family; not only that, but the can brought far more economic value to the shippers along the supply chain, from Japan to Africa, than it did to the woman it was supposed to help.

The interaction illustrated an important lesson—that making a difference involves more than having philanthropic organizations write big checks. Donors have to be invested in how their checks are getting cashed.

Simon—whose sister Nina is executive director of the Santa Cruz Museum of Art and History—said there are a number of ways for people to get involved with their money. They could bank locally to keep their money in the community. She highlighted the work of her brother-in-law Sibley Simon, who’s created an impactinvestment fund to spur workforce housing development. She also lauded Cadenas for helping kick-start a local movement of worker-owned businesses.

“Watch your assets,” Simon said. “The point is, it’s your money. When we put our money in the bank or we hand it to the financial adviser, we treat it like it’s not ours anymore. And other people are making decisions about what our money is doing in society, but we’re still responsible for those decisions.”

SELLING POINT

Cadenas knows how big some of her ideas sound. She realizes that will take more than a couple worker-owned businesses to create a more balanced economy, but she says we have to think about building a new ecosystem when it comes to impact investing.

“We have to plan for 50 years in the future,” she says. “The idea that you’re looking for a return on investment in one year and you’re gonna capitalize on it, that’s the idea of the current model. You’re going to go in and extract all the value from the community or a resource, benefit from it and go. That’s the model. What we’re saying is, ‘No, that doesn’t work.’ We’re not looking to extract the value. We’re looking to build the value in the community where people are going to live. That means we’re not looking to build billionaires.”

Most people, Cadenas says, simply want to be able to afford going to the occasional movie or have the time to visit their regional park.

Cadenas says the first phase of Community Ventures’ plan involves supporting the switch to more worker-owned businesses. Local groupCo-Op SC formed earlier this year to help business owners explore these issues. Cadenas says Community Ventures plans to offer technical assistance, providing access to accountants, lawyers and consultants. The next step would involve crowdfunding, which is just taking off in California as a way for businesses to seek funding from their communities. The final piece, Cadenas says, will be the impact investment fund, to fill in the gaps.

She says that in order to address income gaps, the Community Ventures prioritizes women and Latino families. Those are also the groups that the nonprofit will target as potential employee owners of local businesses.

Cadenas envisions this new model being able to scale from Santa Cruz County and the Monterey Bay to the Central Coast—and eventually even beyond that.

“We have the political will and the history—and, I think, the guts—to try it,” she says. “If there’s any place where we can pilot this and build it up, it’s Santa Cruz. We’re the right size. We’re the right people, and it’s the right time to do it. There’s no reason to hold up. We’ve just got to be willing to take it and build on it.”

Jacob, the news editor for Good Times, is an award-winning journalist, whose news interests include housing, water, transportation, and county politics. A onetime connoisseur of dive bars and taquerias, he has evolved into an aspiring health food nut. Favorite yoga pose: shavasana.